The mechanism of methyl-directed mismatch repair is best understood in E. coli where the requisite strand specificity is based on patterns of DNA methylation at GATC sequences. This system contributes to replication fidelity and controls the level of homeologous recombination. Unlike its role in replication fidelity the exact mechanism of mismatch repair in recombination has not been defined. Bacterial mutS and mutL mutations confer large increases in recombination between sequences that have diverged by several percent or more at the nucleotide level. Since MutS and MutL are proteins involved in initiating repair, including mismatch recognition by MutS, we have tested the possibility that they may also affect the level of exchange that can be tolerated due to formation of mismatched base pairs. Recent work has provided evidence that MutS abolishes RecA-catalyzed strand transfer between fd and M13 bacteriophage DNAs, which vary by 3% at the nucleotide level, but is without effect on M13-M13 or fd-fd exchange. Although MutL alone has no effect on M13-fd heteroduplex formation, the protein dramatically enhances the inhibition of strand transfer mediated by MutS. Analysis of strand-transfer intermediates that accumulate in the presence of MutS and MutL indicates that the proteins block branch migration, presumably in response to mismatches occurring in newly formed heteroduplex.